State-run Oil and Natural Gas Corporation (ONGC) is increasingly transforming into a natural gas-focused energy producer, and the company should now be viewed as a "gas-and-oil" firm rather than an "oil-and-gas" company, Chairman and CEO Arun Kumar Singh said while outlining the company's future growth strategy. The shift reflects the growing contribution of natural gas to ONGC's production and revenue profile, with gas output now surpassing crude oil production.
Addressing analysts, Singh said natural gas has become a more significant part of ONGC's portfolio and is expected to remain the primary driver of growth in the years ahead. While crude oil production is likely to remain largely stable in the absence of major new discoveries, gas production is projected to increase steadily as new projects and fields come on stream.
"Gas is now slightly more than oil in our portfolio," Singh said, emphasizing that the company's evolving production mix reflects broader changes in India's energy landscape. According to him, rising domestic demand for cleaner fuels, supportive government policies and favourable pricing reforms have strengthened the case for natural gas as a key growth engine for ONGC.
The ONGC chief noted that natural gas enjoys strong demand across sectors, including industry, power generation and transportation. He added that gas has become increasingly attractive from a profitability standpoint due to market-linked pricing mechanisms and relatively lower handling costs compared to crude oil. As a result, ONGC's future expansion is expected to be increasingly gas-led.
Singh pointed out that the company already produces and sells more gas than oil. He highlighted that "new well gas" — output from recently drilled wells — is linked to 12 per cent of crude oil prices under the current pricing framework, making it one of the most lucrative segments of ONGC's business. India, he said, offers some of the most favourable gas pricing structures globally.
ONGC's exploration and production business continues to form the backbone of the group, accounting for nearly two-thirds of its overall operations. The contribution of natural gas within that portfolio is expected to grow further as mature fields gradually decline and new gas-producing assets are commissioned.
The company estimates that annual gas production could increase by around 7-8 per cent, supported by projects such as the Daman Upside Development Project (DUDP), Discovered Small Fields (DSF) developments and offshore assets, including wells in the KG-98/2 block. Several of these projects are expected to begin contributing production over the next fiscal year.
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Singh also highlighted the government's efforts to improve the economics of upstream energy production through policy measures such as royalty reductions, market-linked gas pricing and support for deepwater exploration. These initiatives, he said, have allowed producers to retain a greater share of revenues and encouraged fresh investments in exploration and development activities.
The chairman revealed that ONGC drills nearly 500 wells every year, including both exploratory and development wells. The company reported a reserve replacement ratio of more than 1.1 during FY26, indicating that it successfully replenished more reserves than it produced during the year, a key indicator of long-term sustainability.
To sustain production levels and enhance recovery rates, ONGC is currently executing offshore projects worth approximately Rs 33,000 crore. A major focus area remains the Western Offshore region, which contributes a substantial share of the company's output. Singh said efforts are underway to improve recovery from mature assets through advanced technologies and operational improvements.
As part of this strategy, ONGC has entered into a major Technical Services Partnership (TSP) programme with BP covering its Western Offshore assets. The collaboration aims to enhance production efficiency and maximise recovery from ageing fields, with early operational gains already becoming visible.
On the international front, Singh said production from ONGC's stake in Russia's Sakhalin project remains stable, while the long-delayed Mozambique LNG project is progressing and could be completed by 2028. He also indicated that production in Venezuela may rise if regulatory and operating conditions improve in the future.
Beyond conventional hydrocarbons, ONGC is also pursuing diversification through petrochemicals and renewable energy. The company expects a turnaround in its petrochemicals venture OPaL, while its renewable energy arm, ONGC Green, is targeting nearly 3 gigawatts of installed capacity next year. These initiatives form part of ONGC's broader strategy to evolve into a more diversified and future-ready energy company while maintaining its leadership position in India's upstream sector.
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